Financial Crimes Enforcement Network Proposed Amendments to the Bank Secrecy Act Regulations Regarding Reporting and Recordkeeping by Card Clubs

DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network Proposed Amendments to the

Bank Secrecy Act Regulations Regarding Reporting and Recordkeeping by

Card Clubs

31 CFR Part 103

RIN 1506-AA18

AGENCY: Financial Crimes Enforcement Network, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Financial Crimes Enforcement Network (``FinCEN'') is

proposing to amend the regulations implementing the statute generally

referred to as the Bank Secrecy Act to include certain gaming

establishments, commonly called ``card clubs,'' ``card rooms,''

``gaming clubs,'' or ``gaming rooms'' within the definition of

financial institution subject to those regulations.

DATES: Written comments must be received on or before March 20, 1997.

ADDRESSES: Written comments should be submitted to: Office of

Regulatory Policy and Enforcement, Financial Crimes Enforcement

Network, Department of the Treasury, 2070 Chain Bridge Road, Vienna,

Virginia 22182, Attention: NPRM--Card Clubs.

Submission of comments: Comments on all aspects of the proposed

regulation are welcome and will be considered if submitted in writing

prior to March 20,

1997. An original and four copies of any comments must be submitted.

All comments will be available for public inspection and copying, and

no material in any such comments, including the name of any person

submitting comments, will be recognized as confidential. Accordingly,

material not intended to be disclosed to the public should not be

submitted.

Inspection of comments: Comments may be inspected at the Department of

the Treasury between 10:00 a.m. and 4:00 p.m., in the Financial Crimes

Enforcement Network (``FinCEN'') reading room, on the third floor of

the Treasury Annex, 1500 Pennsylvania Avenue, N.W., Washington, D.C.

20220. Persons wishing to inspect the comments submitted should request

an appointment by telephoning (202) 622-0400.

spection of comments: Comments may be inspected at the Department of

the Treasury between 10:00 a.m. and 4:00 p.m., in the Financial Crimes

Enforcement Network (``FinCEN'') reading room, on the third floor of

the Treasury Annex, 1500 Pennsylvania Avenue, N.W., Washington, D.C.

20220. Persons wishing to inspect the comments submitted should request

an appointment by telephoning (202) 622-0400.

FOR FURTHER INFORMATION CONTACT: Leonard C. Senia, Senior Financial

Enforcement Officer, Office of Regulatory Policy and Enforcement,

Financial Crimes Enforcement Network (703) 905-3931, or Joseph M.

Myers, Attorney-Advisor, Office of Legal Counsel, Financial Crimes

Enforcement Network, (703) 905-3557.

SUPPLEMENTARY INFORMATION:

Introduction

This document proposes (i) to add a definition of ``card club,'' in

a new paragraph (8) of 31 CFR 103.11(n), as a component of the

definition of ``financial institution'' for purposes of the Bank

Secrecy Act rules, (ii) to provide, by means of a new paragraph

(7)(iii) in section 103.11(n), for treatment of card clubs generally in

the same manner as casinos under the Bank Secrecy Act, (iii) to

renumber paragraphs (8) and (9) of section 103.11(n) as paragraphs (9)

and (10), respectively, and (iv) to add a new paragraph (11),

applicable only to card clubs, to 31 CFR 103.36(b), to require

retention by card clubs of records of a customer's currency

transactions, and records of all activity at card club cages or similar

facilities, maintained in the ordinary course of a club's business. The

proposed changes reflect the authority contained in section 409 of the

Money Laundering Suppression Act of 1994 (the ``Money Laundering

Suppression Act''), Title IV of the Riegle Community Development and

Regulatory Improvement Act of 1994, Pub. L. 103-325.

Background

records of all activity at card club cages or similar

facilities, maintained in the ordinary course of a club's business. The

proposed changes reflect the authority contained in section 409 of the

Money Laundering Suppression Act of 1994 (the ``Money Laundering

Suppression Act''), Title IV of the Riegle Community Development and

Regulatory Improvement Act of 1994, Pub. L. 103-325.

Background

The statute popularly known as the ``Bank Secrecy Act,'' Titles I

and II of Pub. L. 91-508, as amended, codified at 12 U.S.C. 1829b, 12

U.S.C. 1951-1959, and 31 U.S.C. 5311-5330, authorizes the Secretary of

the Treasury, inter alia, to issue regulations requiring financial

institutions to keep records and file reports that are determined to

have a high degree of usefulness in criminal, tax, and regulatory

matters, and to implement counter-money laundering programs and

compliance procedures. Regulations implementing Title II of the Bank

Secrecy Act (codified at 31 U.S.C. 5311-5330), appear at 31 CFR Part

103. The authority of the Secretary to administer the Bank Secrecy Act

has been delegated to the Director of FinCEN.

The range of financial institutions to which the Bank Secrecy Act

applies is not limited to banks and other depository institutions. It

also includes securities brokers and dealers, money transmitters, and

the other non-bank businesses that offer customers one or more

financial services.

State licensed gambling casinos were generally made subject to the

Bank Secrecy Act as of May 7, 1985, by regulation issued early that

year. See 50 FR 5065 (February 6, 1985).1 Gambling casinos

authorized to do business under the Indian Gaming Regulatory Act became

subject to the Bank Secrecy Act on August 1, 1996. See 61 FR 7054-7056

(February 23, 1996).2

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activities ``similar to'' the activities of the businesses listed in

the Bank Secrecy Act, as well as (ii) other businesses ``whose cash

transactions have a high degree of usefulness in criminal, tax, or

regulatory matters.'' See 31 U.S.C. 5312(a)(2)(Y) and (Z) (as

renumbered by the Money Laundering Suppression Act).

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(2) financial institution means--

* * * * *

(X) a casino, gambling casino, or gaming establishment with an

annual gaming revenue of more than $1,000,000 which--

(i) is licensed as a casino, gambling casino, or gaming

establishment under the laws of any State or any political

subdivision of any State; or

(ii) is an Indian gaming operation conducted under or pursuant

to the Indian Gaming Regulatory Act other than an operation which is

limited to class I gaming (as defined in section 4(6) of such Act) *

* *

31 U.S.C. 5312(a)(2)(X). Treasury has previously indicated that it is

in the process of rethinking the application of the Bank Secrecy Act to

gaming establishments. See 59 FR 61660-61662 (December 1, 1994) and 61

FR 7054, 7055 (February 23, 1996). This notice of proposed rulemaking

is a step in that process.

Explanation of Provisions

A. Overview

The proposed regulations would expand the range of gaming

establishments to which the Bank Secrecy Act applies to include card

clubs. Generally card clubs would be subject to the same rules as

casinos (a matter on which comment is specifically requested below),

unless a specific provision of the rules in 31 CFR Part 103 applicable

to casinos explicitly required a different treatment for card clubs.

B. Definition of Card Club

and the range of gaming

establishments to which the Bank Secrecy Act applies to include card

clubs. Generally card clubs would be subject to the same rules as

casinos (a matter on which comment is specifically requested below),

unless a specific provision of the rules in 31 CFR Part 103 applicable

to casinos explicitly required a different treatment for card clubs.

B. Definition of Card Club

The definition of card club itself is proposed to be added as a

component of the definition of ``financial institution'' in a new

paragraph 31 CFR 103.11(n)(8).4 Under the proposed amendment, the

term would include, inter alia, any establishment of the type commonly

referred to as a ``card club,'' ``card room,'' ``gaming club'' or

``gaming room,'' that is duly licensed or authorized to do business

either under state law, under the laws of a particular political

subdivision within a state, or under the Indian Gaming Regulatory Act

or other federal, state, or tribal law or arrangement affecting Indian

lands. Card clubs licensed by U.S. territories or possessions would

also fall within the definition.

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\4\ As indicated, no language in the financial institution

definition is being deleted; present paragraphs 103.11(n)(8) and

(n)(9) would simply become paragraphs (n)(9) and (n)(10),

respectively.

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The general need for and appropriateness of treatment of casinos as

financial institutions for purposes of the Bank Secrecy Act have been

accepted, as indicated above, since the mid-1980s. Treasury has made

clear the need to prevent casinos, which both deal in cash and cash-

equivalent chips

and can offer a variety of other financial services to customers, from

being used to avoid the effect of the Bank Secrecy Act.5

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ses of the Bank Secrecy Act have been

accepted, as indicated above, since the mid-1980s. Treasury has made

clear the need to prevent casinos, which both deal in cash and cash-

equivalent chips

and can offer a variety of other financial services to customers, from

being used to avoid the effect of the Bank Secrecy Act.5

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\5\ The preamble to the final rule bringing casinos within the

Bank Secrecy Act stated that

[i]n recent years Treasury has found that an increasing number

of persons are using gambling casinos for money laundering and tax

evasion purposes. In a number of instances, narcotics traffickers

have used gambling casinos as substitutes for other financial

institutions in order to avoid the reporting and recordkeeping

requirements of the Bank Secrecy Act.

Inclusion of casinos in the definition of financial

institution[s] in 31 CFR Part 103 was among the specific

recommendations in the October 1984 report of the President's

Commission on Organized Crime, ``The Cash Connection: Organized

Crime, Financial Institutions, and Money Laundering.'' The problem

was also the subject of hearings in 1984 before the House Judiciary

Subcommittee on Crime entitled ``The Use of Casinos to Launder the

Proceeds of Drug Trafficking and Organized Crime.''

In order to prevent the use of casinos in this fashion, Treasury

is amending the regulations in 31 CFR Part 103 to require gambling

casinos to file the same types of reports [and maintain the same

types of records] that it requires from financial institutions

currently covered by the Bank Secrecy Act.

50 FR 5065, 5066, (February 6, 1985); see also 49 FR 32861,

32862 (August 17, 1984) (corresponding language in notice of

proposed rulemaking).

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ling

casinos to file the same types of reports [and maintain the same

types of records] that it requires from financial institutions

currently covered by the Bank Secrecy Act.

50 FR 5065, 5066, (February 6, 1985); see also 49 FR 32861,

32862 (August 17, 1984) (corresponding language in notice of

proposed rulemaking).

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Although application of the Bank Secrecy Act to gaming

establishments has heretofore been limited to casinos, that limitation

is not a statutory one. As noted, the statutory definition of financial

institution includes any establishment licensed as a ``gaming

establishment,'' whether the licensing authority is a state, a

municipality or other state subdivision, or one of the licensing

authorities recognized by the Indian Gaming Regulatory Act. See 31

U.S.C. 5311(a)(2)(X)(quoted above).

Card clubs are a fast-growing segment of the gaming industry,

primarily in California. Although card club operations differ, the

establishments generally offer facilities for gaming by customers who

bet against one another, rather than against the establishment. Most

large card clubs run the games, but the clubs earn their revenue by

receiving a fee from customers (for example a per table charge) rather

than from, as in a classic casino, running games and effectively

``banking'' the games offered so that customers bet against the house.

While the scope of casinos and card club operations may have

differed in the past, they no longer necessarily do so. California and

some other states in which card clubs operate do not permit casino

gaming (or only permit such gaming in limited forms). But, for example,

customers at California card clubs wagered about $8.9 billion in 1995.

Against that background, there are two primary reasons that card clubs,

like other gaming establishments, require coverage under the Bank

Secrecy Act

necessarily do so. California and

some other states in which card clubs operate do not permit casino

gaming (or only permit such gaming in limited forms). But, for example,

customers at California card clubs wagered about $8.9 billion in 1995.

Against that background, there are two primary reasons that card clubs,

like other gaming establishments, require coverage under the Bank

Secrecy Act.

First, many card clubs, like casinos, now offer their customers a

wide range of financial services. As it indicated when it proposed

extension of the Bank Secrecy Act to tribal casinos, the Treasury has

generally sought to apply the Bank Secrecy Act to gaming establishments

that provide their customers with a financial product--gaming--and as a

corollary offer a broad array of financial services, such as customer

deposit or credit accounts, facilities for transmitting and receiving

funds transfers directly from other institutions, and check cashing and

currency exchange services, that are similar to those offered by

depository institutions and other financial firms. The fact that the

gaming at card clubs does not directly involve the wagering of house

monies in no way alters the fact that vast sums of currency and other

funds pass through such establishments, or the fact that card clubs are

coming to offer their customers corollary financial services to

facilitate the movement of funds.

Second, card clubs are at least as vulnerable as other gaming

establishments to use by money launderers and those seeking to commit

tax evasion or other financial crimes, both because of their size and

because those institutions lack many of the controls found at casinos.

Given their growth, their prevalence in the nation's most populous

state, and their potential for expansion, there is no basis for

distinguishing card clubs from casinos for purposes of the Bank Secrecy

Act.6

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crimes, both because of their size and

because those institutions lack many of the controls found at casinos.

Given their growth, their prevalence in the nation's most populous

state, and their potential for expansion, there is no basis for

distinguishing card clubs from casinos for purposes of the Bank Secrecy

Act.6

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\6\ Federal and state law enforcement authorities have expressed

concern for several years about card clubs as venues for criminal

activity. See, e.g., Asian Organized Crime, Part I, S. Rep. 102-346,

101st Cong., 1st Sess. (1991); Asian Organized Crime: the New

International Criminal, S. Rep. 102-940, 101st Cong., 2nd. Sess.

(1992); Office of the Attorney General of California, ``Status of

Cardroom Gambling in California and the Proposed Gambling Control

Act'' (Public Document, February 1995); cf. Permanent Subcommittee

on Investigations, Senate Committee on Governmental Affairs,

Hearings: Asset Forfeiture Program--A Case Study of the Bicycle Club

Casino, 104th Cong., 2nd. Sess. (March 19, 1996).

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There is also some indication that the line between card clubs and

casinos may be blurring in practice. Thus, FinCEN noted in the preamble

to the final rule extending the Bank Secrecy Act to tribal casinos

that:

[A]n establishment that claimed to be a gambling ``club'' rather

than a casino because it simply offered customers an opportunity to

gamble with one another, but that in practice funded certain

customers so that other customers were in effect gambling against

``house'' money, and that offered its customers financial services

of various kinds, is arguably a casino under present law

os

that:

[A]n establishment that claimed to be a gambling ``club'' rather

than a casino because it simply offered customers an opportunity to

gamble with one another, but that in practice funded certain

customers so that other customers were in effect gambling against

``house'' money, and that offered its customers financial services

of various kinds, is arguably a casino under present law. Thus, for

example, if such a ``club'' failed to file currency transactions

reports or allowed a customer to deposit funds in a player bank

account in the name of the customer without requiring the customer

to provide identifying information, the club would arguably be

operating in violation of the Bank Secrecy Act.

61 FR 7055 note 1.

Given the growth of card clubs and their potential for offering a

venue for money launderers, the application of the Bank Secrecy Act to

such establishments should not depend on whether games are banked or

otherwise backed with house funds.7 Similarly, the fact that some

card clubs operating under the terms of the Indian Gaming Regulatory

Act, 25 U.S.C. 2701 et seq, may be Class II rather than Class III

establishments for purposes of the regulatory provisions of that

legislation (so that card clubs are subject to tribal regulation rather

than to regulation pursuant to state-tribal compact), does not provide

a relevant distinction for Bank Secrecy Act purposes.8 (As was the

case with tribal casinos, a card club that operates on Indian lands

under a view that compliance with the Indian Gaming Regulatory Act is

unnecessary or inconsistent with inherent tribal rights would not for

that reason be exempted from the terms of the Bank Secrecy Act, to the

extent that those terms would otherwise apply to the card club's

operations.)

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that operates on Indian lands

under a view that compliance with the Indian Gaming Regulatory Act is

unnecessary or inconsistent with inherent tribal rights would not for

that reason be exempted from the terms of the Bank Secrecy Act, to the

extent that those terms would otherwise apply to the card club's

operations.)

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\7\ At present, the receipt of cash in excess of $10,000 by card

clubs in a single transaction (or multiple related transactions) is

required to be reported under section 6050I of the Internal Revenue

Code. The limited cash transaction reporting rules of section 6050I

(which apply to currency received in all non-financial trades or

businesses) are not as extensive as the reporting rules of the Bank

Secrecy Act (which apply both to receipts and payments of currency

and are not matched by recordkeeping, suspicious transaction

reporting, and anti-money laundering compliance program rules).

\8\ The National Indian Gaming Commission has taken the position

that games banked by players, rather than the house, are nonetheless

``banked card games'' whose operation is required to occur in a

Class III facility. Thus it appears that some percentage of card

clubs on tribal lands will be, or will be operated within, Class III

facilities that will generally become subject to the Bank Secrecy

Act on August 1, 1996. See National Indian Gaming Commission

Bulletin 95-1 (April 10, 1995). FinCEN understands that certain

Asian card games (whose rules employ a betting formula in which a

player does not offer to take on all competitors), may be permitted

to be offered in Class II facilities for purposes of the Indian

Gaming Regulatory Act.

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National Indian Gaming Commission

Bulletin 95-1 (April 10, 1995). FinCEN understands that certain

Asian card games (whose rules employ a betting formula in which a

player does not offer to take on all competitors), may be permitted

to be offered in Class II facilities for purposes of the Indian

Gaming Regulatory Act.

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Card clubs, like casinos, will only become subject to the Bank

Secrecy Act once they generate more than $1 million in ``gross annual

gaming revenue.'' Treasury believes that as applied to card clubs the

term includes revenue derived from or generated by customer gaming

activity (whether in the form of per-game or per-table fees, fees based

on winnings, rentals, or otherwise) and received by an establishment.

C. Treatment of Card Clubs Under the Bank Secrecy Act

Under the proposed regulations, card clubs would be treated under

the Bank Secrecy Act in the same manner as casinos unless specific

provisions of the rules in 31 CFR Part 103 explicitly require a

different treatment. Thus, card clubs would become subject not simply

to the Bank Secrecy Act's currency transaction reporting rules but to

the full set of provisions (described by the Congress as ``a

comprehensive currency reporting and detailed recordkeeping system with

numerous anti-money laundering safeguards'' 9) to which casinos in

the United States are subject.

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\9\ See H.R. Rep. No. 652, 103rd Cong., 2nd Sess. 193 (1994).

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ress as ``a

comprehensive currency reporting and detailed recordkeeping system with

numerous anti-money laundering safeguards'' 9) to which casinos in

the United States are subject.

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\9\ See H.R. Rep. No. 652, 103rd Cong., 2nd Sess. 193 (1994).

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Treatment of card clubs on a par with casinos would generally

impose on such clubs the Bank Secrecy Act rules that apply to casinos.

Thus, each card club would be required to file with the Department of

the Treasury a report of each receipt or disbursement of more than

$10,000 in currency in its operations during any gaming day;

aggregation of multiple currency transactions is required in a number

of situations. See 31 CFR 103.22(a)(2). The requirement would apply to

all receipts or disbursements of currency in connection with gaming

activities at the card club, including, but not limited to, transfers

of currency for chip purchases or redemptions, exchanges of bills of

one denomination for bills of another denomination, exchanges of one

currency for another currency, transfers to or from player accounts or

deposit facilities, payments or advances on credit, wagers of currency

or payments of currency to settle wagers, and transfers intended for

conversion to other forms of negotiable instruments or for electronic

funds transfer or transmittal out of, or as a result of such transfer

or transmittal into, the card club.10

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r

deposit facilities, payments or advances on credit, wagers of currency

or payments of currency to settle wagers, and transfers intended for

conversion to other forms of negotiable instruments or for electronic

funds transfer or transmittal out of, or as a result of such transfer

or transmittal into, the card club.10

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\10\ Legislation recently enacted in California adds gaming

clubs to the list of financial institutions in that state that are

required to report transactions in currency of more than $10,000 to

the California Department of Justice. See Assembly Bill 3183 (signed

September 28, 1996), amending Cal. Penal Code 14161. The new

reporting requirement becomes effective on January 1, 1997. It is

anticipated that the California and Bank Secrecy Act currency

transaction reporting requirements will be coordinated (as is done

in other situations in which Bank Secrecy Act and state reporting

rules overlap) to reduce regulatory burden and costs of compliance.

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It is particularly important to understand that the requirements

would apply regardless of where the transfers occur at the card club.

Thus no distinction is to be made between, for example, transactions at

a cage, cashier, or other central facility, and chip purchases or

redemptions from club runners or from dealers or other operators of

specific games.

Each card club would also be required, like a casino, to maintain,

and to retain, certain records relating to its operation, including

records identifying account holders (see 31 CFR 103.36(a)), records

showing transactions for or through each customer's account (see,

generally, 31 CFR 103.36(b)), and records of transactions involving

persons, accounts or places outside the United States. See 31 CFR

103.36(b)(5)

also be required, like a casino, to maintain,

and to retain, certain records relating to its operation, including

records identifying account holders (see 31 CFR 103.36(a)), records

showing transactions for or through each customer's account (see,

generally, 31 CFR 103.36(b)), and records of transactions involving

persons, accounts or places outside the United States. See 31 CFR

103.36(b)(5). Records of transactions of more than $3,000 involving

checks or other monetary instruments and records that are prepared or

used by a card club to monitor a customer's gaming activity are also

among the types of records that would be required to be maintained. See

31 CFR 103.36 (b)(8) and (b)(9). (A specific record retention

requirement, applicable only to card clubs, is discussed below.)

Finally, card clubs would be required to institute training and

internal control programs to assure and monitor compliance with the

Bank Secrecy Act. See 31 CFR 103.36(b)(10) and 103.54(a).11

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\11\ In addition, Treasury intends to issue regulations to

require classes of non-bank financial institutions, including gaming

establishments, to file reports of suspicious transactions. See 31

U.S.C. 5318(g)(1).

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Card clubs within the scope of the proposed rule will in any event

remain subject to the filing requirements of section 6050I of the

Internal Revenue Code, with respect to their gaming and financial

services operations, until the proposals made by this document become

effective as a final rule. See section 6050I (a) and (c) of the

Internal Revenue Code, 26 U.S.C. 6050I(a) and (c), and Treas. Reg.

1.6050I-1(d)(2). Section 6050I of the Code will continue to apply to

any non-gaming and non-financial services operations (for example

restaurant service), at card clubs that become subject to the Bank

Secrecy Act.

D. Additions to Record Retention Requirements

e

effective as a final rule. See section 6050I (a) and (c) of the

Internal Revenue Code, 26 U.S.C. 6050I(a) and (c), and Treas. Reg.

1.6050I-1(d)(2). Section 6050I of the Code will continue to apply to

any non-gaming and non-financial services operations (for example

restaurant service), at card clubs that become subject to the Bank

Secrecy Act.

D. Additions to Record Retention Requirements

The proposed rule contains one new record retention requirement,

applicable only to card clubs. A proposed new paragraph (11) of 31 CFR

103.36(b) would require card clubs to retain, for five years, all

currency transaction logs, multiple currency transaction logs, and cage

control logs that the clubs maintain in their business operations. This

requirement is proposed to assure an adequate basis for the audit of

compliance or review of compliance by card clubs with the Bank Secrecy

Act; the restriction of the requirement to card clubs reflects the

absence for such clubs of a state regulatory scheme under whose terms

similar records would already be required to be maintained.

E. Request for Comments on Specific Subjects

FinCEN recognizes that card club operations are not uniform

throughout the United States, and it is keenly aware of the need to

proceed thoughtfully in adopting the rules of the Bank Secrecy Act to

the realities of those operations. FinCEN specifically seeks comment on

the following questions:

1. Are there particular parts of the Bank Secrecy Act regulations

applicable to casinos generally that cannot or should not be applied to

card clubs?

2. What types of financial services, other than gaming, are offered

by card clubs?

3. Do any elements of the operation of card clubs on tribal lands

justify different treatment for such clubs than for other card clubs?

Are specific rules necessary to take account of situations in which

card clubs operate in Class II facilities that offer several different

Class II gaming activities?

4

ubs?

2. What types of financial services, other than gaming, are offered

by card clubs?

3. Do any elements of the operation of card clubs on tribal lands

justify different treatment for such clubs than for other card clubs?

Are specific rules necessary to take account of situations in which

card clubs operate in Class II facilities that offer several different

Class II gaming activities?

4. How can compliance with the Bank Secrecy Act by tribal card

clubs best be examined and enforced?

In seeking guidance on these and other issues raised by this notice

of proposed rulemaking, FinCEN is interested in hearing from all

parties potentially affected by the proposed rules, including operators

of card clubs, officials of jurisdictions in which card clubs are

located, and Indian tribes on whose lands card club gaming is

conducted.

Treasury is continuing to consider issues affecting the application

of the Bank Secrecy Act to the gaming industry generally. Those issues

include whether special rules should be applicable to small gaming

establishments, and how best to implement with respect to gaming

establishments the general provisions added to the Bank Secrecy Act by

the Annunzio-Wylie Anti-Money Laundering Act of 1992, Title XV of the

Housing and Community Development Act of 1992, Pub. L. 102-550, and the

Money Laundering Suppression Act.

Proposed Effective Date

The amendments to 31 CFR Part 103 proposed in this notice of

proposed rulemaking will become effective 90 days following publication

in the

Federal Register of the final rule to which this notice of proposed

rulemaking relates.

Special Analyses

Title XV of the

Housing and Community Development Act of 1992, Pub. L. 102-550, and the

Money Laundering Suppression Act.

Proposed Effective Date

The amendments to 31 CFR Part 103 proposed in this notice of

proposed rulemaking will become effective 90 days following publication

in the

Federal Register of the final rule to which this notice of proposed

rulemaking relates.

Special Analyses

It has been determined that this notice of proposed rulemaking (i)

is not subject to the ``budgetary impact statement'' requirement of

section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-

4), and (ii) is not a significant regulatory action as defined in

Executive Order 12866. It is not anticipated that this proposed rule,

if adopted as a final rule, will have an annual effect on the economy

of $100 million or more. Nor will it, if so adopted, affect adversely

in a material way the economy, a sector of the economy, productivity,

competition, jobs, the environment, public health or safety, or state,

local or tribal governments or communities. The proposed rule is

neither inconsistent with, nor does it interfere with, actions taken or

planned by other agencies. Finally, it raises no novel legal or policy

issues.

A ``description of the reasons why action by the agency is being

considered'' and a ``succinct statement of the objectives of, and legal

basis for, the proposed rule''--all as required by 5 U.S.C. 553(b)--are

found elsewhere in this preamble.

Paperwork Reduction Act

h, nor does it interfere with, actions taken or

planned by other agencies. Finally, it raises no novel legal or policy

issues.

A ``description of the reasons why action by the agency is being

considered'' and a ``succinct statement of the objectives of, and legal

basis for, the proposed rule''--all as required by 5 U.S.C. 553(b)--are

found elsewhere in this preamble.

Paperwork Reduction Act

The proposed rule would add a new paragraph (b)(11) to section

103.36 to require card clubs to retain records, created in the ordinary

course of business, (i) of currency transactions (for example, currency

transaction logs and multiple currency transaction logs) and (ii) of

all activity at card club cages or similar facilities, including,

without limitation, cage control logs. FinCEN believes that, as a

matter of usual and customary business practice, card clubs collect and

maintain information about currency and cage transactions conducted by

their customers; proposed paragraph (b)(11) would require simply that

such records be retained for at least five years (the generally

applicable Bank Secrecy Act record retention period). FinCEN thus

believes that the retention requirement of proposed 103.36(b)(11), the

only new retention requirement in the proposed rule, would impose a

minimal additional burden on the card club industry. Nevertheless,

because proposed 103.36(b)(11) is a recordkeeping obligation not

presently found in 31 CFR Part 103, FinCEN hereby presents the

following information concerning the retention of information on

currency and cage transactions, in accordance with requirements of the

Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq., to assist

those persons wishing to comment on the proposed information retention

requirement.

Proposed Collection Retention Requirement

t

presently found in 31 CFR Part 103, FinCEN hereby presents the

following information concerning the retention of information on

currency and cage transactions, in accordance with requirements of the

Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq., to assist

those persons wishing to comment on the proposed information retention

requirement.

Proposed Collection Retention Requirement

Description of Respondents: All card clubs conducting transactions

in currency and cage transactions with their customers and creating

records of such transactions in the ordinary course of business.

Frequency: Each time a currency or cage transaction is recorded.

Estimated Number of Currency and Cage Transactions: Unknown.

Estimate of Total Annual Burden on Card Clubs: Recordkeeping burden

estimate = approximately 686 hours per year.

Estimate of Total Annual Cost to Card Clubs for Hour Burdens: Based

on $20 per hour, the total cost of compliance with the proposed

recordkeeping rule is estimated to be approximately $14,000.

Estimate of Total Other Annual Costs to Respondents: None.

FinCEN specifically invites comments on the following subjects: (a)

Whether the proposed collection of information is necessary to further

the purposes of the Bank Secrecy Act, including whether the information

retained shall have practical utility; (b) the accuracy of FinCEN's

estimate of the burden of the proposed collection of information; (c)

ways to enhance the quality, utility, and clarity of the information to

be retained; and (d) ways to minimize the burden of the collection of

information on the affected industry, including through the use of

automated storage and retrieval techniques or other forms of

information technology.

In addition, the Paperwork Reduction Act of 1995, supra, requires

agencies to estimate the total annual cost burden to respondents or

recordkeepers resulting from the retention of information. Thus, FinCEN

also specifically requests comments to assist with this estimate

industry, including through the use of

automated storage and retrieval techniques or other forms of

information technology.

In addition, the Paperwork Reduction Act of 1995, supra, requires

agencies to estimate the total annual cost burden to respondents or

recordkeepers resulting from the retention of information. Thus, FinCEN

also specifically requests comments to assist with this estimate. In

this connection, FinCEN requests commenters to identify any additional

costs associated with the retention of the information covered by the

requirement.

The information collection in the proposed rule has been submitted

to the Office of Management and Budget for review under section 3507(d)

of the Paperwork Reduction Act of 1995. Comments on the proposed

collection may be directed to the Office of Information and Regulatory

Affairs of OMB, attention: Desk Officer for the Treasury Department.

Responses to this request for comments from FinCEN will be summarized

and included in the request for Office of Management and Budget

approval. All comments will become a matter of public record.

Drafting Information

This notice of proposed rulemaking was prepared in FinCEN's Office

of Legal Counsel, with the participation of staff members of FinCEN's

Office of Regulatory Policy and Enforcement.

List of Subjects in 31 CFR Part 103

Authority delegations (Government agencies), Banks, banking,

Currency, Foreign banking, Gambling, Investigations, Law enforcement,

Reporting and recordkeeping requirements, Taxes.

Proposed Amendments to the Regulations

Accordingly, 31 CFR Part 103 is proposed to be amended as follows:

PART 103--FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND

FOREIGN TRANSACTIONS

1. The authority citation for Part 103 continues to read as

follows:

Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5330.

2. Section 103.11 is amended by redesignating paragraphs (n)(8) and

oposed Amendments to the Regulations

Accordingly, 31 CFR Part 103 is proposed to be amended as follows:

PART 103--FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND

FOREIGN TRANSACTIONS

1. The authority citation for Part 103 continues to read as

follows:

Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5330.

2. Section 103.11 is amended by redesignating paragraphs (n)(8) and

(n)(9) as paragraphs (n)(9) and (n)(10), respectively, and by adding

new paragraphs (n)(7)(iii) and (n)(8) to read as follows:

Sec. 103.11 Meaning of terms.

* * * * *

(n) * * *

(7) * * *

(iii) Any reference in this Part, other than in this paragraph

(n)(7) and in paragraph (n)(8), to a casino shall also include a

reference to a card club, unless the provision in question contains

specific language varying its application to card clubs or excluding

card clubs from its application.

(8)(i) Card club. A card club, gaming club, card room, gaming room,

or similar gaming establishment that is duly licensed or authorized to

do business as such in the United States, whether under the laws of a

State, of a Territory or Insular Possession of the United States, or of

a political subdivision of any of the foregoing, or under the Indian

Gaming Regulatory Act or other federal, state, or tribal law or

arrangement affecting Indian lands (including, without limitation, an

establishment operating on the assumption or under the view that no

such authorization is required for

operation on Indian lands for an establishment of such type), and that

has gross annual gaming revenue in excess of $1,000,000. The term

includes the principal headquarters and every domestic branch or place

of business of the establishment. The term ``casino,'' as used in this

Part shall include a reference to ``card club'' to the extent provided

in paragraph (n)(7)(iii).

on is required for

operation on Indian lands for an establishment of such type), and that

has gross annual gaming revenue in excess of $1,000,000. The term

includes the principal headquarters and every domestic branch or place

of business of the establishment. The term ``casino,'' as used in this

Part shall include a reference to ``card club'' to the extent provided

in paragraph (n)(7)(iii).

(ii) For purposes of this paragraph (n)(8), ``gross annual gaming

revenue'' means the gross revenue derived from or generated by customer

gaming activity (whether in the form of per-game or per-table fees,

however computed, rentals, or otherwise) and received by an

establishment, during either the establishment's previous business year

or its current business year. A card club that is a financial

institution for purposes of this Part solely because its gross annual

revenue exceeds $1,000,000 during its current business year, shall not

be considered a financial institution for purposes of this Part prior

to the time in its current business year when its gross annual revenue

exceeds $1,000,000.

3. Section 103.36 is amended by adding a new paragraph (b)(11) to

read as follows:

Sec. 103.36 Additional records to be made and retained by casinos.

* * * * *

(b) * * *

(11) In the case of card clubs only, records of all currency

transactions by customers, including without limitation, records in the

form of currency transaction logs and multiple currency transaction

logs, and records of all activity at cages or similar facilities,

including, without limitation, cage control logs.

* * * * *

Dated: December 16, 1996.

Stanley E. Morris,

Director, Financial Crimes Enforcement Network.

[FR Doc. 96-32396 Filed 12-19-96; 8:45 am]

BILLING CODE 4820-03-P